Insights from the Private and Alternative Credit sessions at Global Banking & Markets' flagship Middle East festival, Dubai.
Private credit is expanding fast across the Middle East — but describing it simply as "an alternative to bank lending" misses the more interesting forces actually shaping the market. Discussions at GBM's flagship Middle East festival surfaced a market built around distinctive regional financing gaps, new sources of data, and a far more tangled relationship with the banking sector than is commonly assumed.
Here's a glimpse at what emerged:
1. The real constraint may not be capital — it's confidence in enforcement. International managers are actively examining regional opportunities. Their hesitation isn't about demand — it's about what happens if a borrower runs into trouble, and whether restructuring and court processes behave predictably.
2. The SME funding gap may partly be a data gap. Capital may be available but unable to reach smaller borrowers because lenders simply lack timely, reliable information to assess them — making fintechs a potential piece of credit infrastructure, not just another borrower category.
3. Asset-backed finance could eclipse conventional direct lending. Pools of receivables, trade flows and other cash-generating assets — rather than bilateral corporate loans — may define the next major phase of regional private credit.
4. The most visible businesses aren't always the most resilient credit. Recent disruption hit internationally exposed, high-profile sectors hardest. Quieter, domestically focused businesses often proved sturdier — and may be where the better risk-adjusted opportunities sit.
5. Banks and private credit funds are neither rivals nor allies — they're both, often at once. The two compete for borrowers in some deals while banks provide leverage, referrals and retained exposure in others. It's an ecosystem, not a contest.
6. Bank leverage boosts fund returns — but shifts the risk. Back leverage from banks can meaningfully lift investor returns, but the bank is typically repaid first. Reported returns may owe more to leverage than to underlying loan performance — a detail due diligence shouldn't skip.
7. A difficult economic year can produce a strong private-credit vintage. As banks turn cautious, disciplined private lenders can move quickly, secure wider spreads and negotiate stronger protections — meaning new deployment and existing portfolio performance can move in opposite directions.
Each of these points comes with the full evidence, context and implications discussed by practitioners in Dubai — the surface-level read barely captures what makes this market genuinely different from how it's usually described.
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